Will looming federal funding cuts for water infrastructure force investment prioritization?

• By Josh Ellis
• July 15, 2012 Post a comment

Last week the U.S. House Appropriations Committee approved an FY 2013 spending bill with marked cuts for the U.S. Environmental Protection Agency (EPA), U.S. Geological Survey, and Dept. of Interior (see chart below, courtesy of Circle of Blue).  Many of these cuts would directly impact federal funding streams for water resources research and infrastructure investment at the state and local levels.  None of these cuts are eminient—having been reported out of committee, the spending bill would need to approved by the House, synched up with a Senate version, and then signed by the President.  Reports from D.C. suggest that the House will be considering national defense spending first, and may not be able consider other federal funding bills until after the November election. In either case, there's a long way to go, but the situation merits monitoring.  

The two hardest hit programs, percentage-wise, would be the National Park Service's Land and Water Conservation Fund and the EPA's Clean Water State Revolving Fund.  The former, according to the official web site, "provides matching grants to States and local governments for the acquisition and development of public outdoor recreation areas and facilities (as well as funding for shared federal land acquisition and conservation strategies). The program is intended to create and maintain a nationwide legacy of high quality recreation areas and facilities and to stimulate non-federal investments in the protection and maintenance of recreation resources across the United States." Open space protection, wetlands conservation, easement programs and the like are paramount to protecting fragile habitats and ensuring equitable distribution of and access to recreational facilities.  Those are important goals in and of themselves.  However, these same open spaces can also play a major role in aquifer recharge and water quality improvements.  The House Appropriations Committee proposes to cut federal investment  in those areas by just a hair under 80 percent.

The latter program, the Clean Water State Revolving Fund, is a low-interest loan program, run by state level EPAs (or equivalent agencies), and requiring a match with state and local funds. Every year the federal and state governments make an additional contribution to an ever-growing pot of available funding for capital investments.   The funding is then available to local water managers—mostly public utilities—for projects that bring them into closer compliance with the U.S. Clean Water Act and its provisions on keeping pollutants out of waterways (there is a similar program to assist with compliance of the U.S. Safe Drinking Water Act). 

It would be a mistake to say Illinois will end up with less funding if this proposed federal spending bill comes to fruition; even with a reduced annual contribution, the pot will still grow, but at a slower rate. However, much of the approximately $3.7 billion in low interest loan assistance that Ill. EPA has been able to make over the past 20 years (through both programs) is locked up in long-term loans in various stages of repayment. The loan fund is recapitalized with an annual infusion of new federal/state funding, plus repayment from loan holders, plus the nominal interest that accrues during repayment (most recently the Ill. EPA used the accrued interest to fund the Ill. Green Infrastructure Grant).  All told, in a given year Ill. EPA is able to offer assistance in the range of $300 million or so. This looks great until you consider that in FY2012 they received 447 pre-applications for a total request in the area of $2.3 billion. With that kind of demand, prioritization becomes very important.

In 2010, the Ill. EPA invited MPC, along with many other organizations—including the Chicago Metropolitan Agency for Planning, Center for Neighborhood Technology, Openlands, Illinois Rural Water Association, Illinois Section-American Water Works Association, and Illinois Municipal League—to participate in a review process with an eye toward a better system of prioritization.  The results of that included some modest steps in the right direction.  These recommendations are all in various stages of being implemented. A few of these included:

• Limiting the number of pre-applications a single entity could file to five, in an attempt to curb a "wish list" mentality;
• Only fully scoring pre-applications with an approved facilities plan in place, so as to reduce the potential universe of projects to those there closer to the design/build phase than the concept phase;
• Creating a new class of projects—green infrastructure.  Ill. EPA subsequently followed up with a request for more ideas on how to score prioritize projects in this class.
• And most importantly, overhauling the entire scoring system to be more indicative of effective resource and utility management. 

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